Silos Aren’t Only on Farms

Silos commonly exist within companies and unlike storage silos they have no value; to the contrary, they are both a disruptive and expensive waste of organizational resources.

Silos exist when functional departments do not hold a holistic view of their function within the organization. Groups in silos (and they can be as small as one) can be characterized as lacking the fundamental concept of internal customers, the importance of customer service and lacking the big picture of the organization. Silos foster insular and defensive behavior, neither of which is beneficial or productive.

Missing within these silos is the entire concept of “systems thinking”. An excellent read on this subject is Systems Thinking Basics, by Virginia Anderson and Lauren Johnson. One of their key points is that a system is a connection of parts which is fully functional only when all the parts are individually, fully functional and in concert with the common goal.

Another excellent book is Silos, Politics and Turf Wars, by Patrick Lencioni. Lencioni points out that it is necessary to go beyond the behavioral issues and identify the underlying contextual issues that are at the core of the problem.

Silos form when individual departments or functions create their own goals, which are self-serving (and maybe self-preserving) but not common to the organizational goals. Every part of a company needs to have and focus on common goals. In manufacturing, the “golden goal” can be defined no more clearly and concisely than to ship orders 100% complete, perfect and on time.

That goal can be applied equally well to internal customers as to external customers. The defining of that goal has to come from management, and the management’s focus must always be with that goal kept clearly and completely in mind. The goal of 100% complete, perfect and on time must be treated holistically; no individual element is more important than any other and if you fail in one, you fail completely.

We distort the goal and foster the growth of silos when we fail to maintain this common goal in its entirety. An engineering department that is under great pressure to maintain due dates to the shop can lose sight of the “100% complete and perfect” aspect of the goal. They react to the most visible aspect of failure: missing their due dates.

Purchasing departments are often measured by price variances. If they can buy widgets for 3 percent less than they bought that widget last year, that constitutes a win when measured on a cost goal. However, if that widget is not delivered 100% complete, perfect and on time to the shop, ultimately that lower price widget can increase manufacturing costs far beyond the claimed savings.

In both these examples, the individual departmental “battle” might appear to have been won but the organizational “war” was lost because the focus on the internal customer was lost. One of the greatest values of cross-functional teams in solving organizational problems is that they encourage collaboration and teamwork toward the common goal that is broader (and more important) than any individual or departmental objective.

If you are a department manager, be bold: define your internal customer(s), develop your own customer service survey, and ask your “customers” to rate your performance against the goal of 100% complete, perfect and on time.

Those of you in top management, ask yourself if your organizational goal(s) are clearly defined and customer focused. Next, review the goals of your functional departments: do they share that same clarity and common focus? Just as important: are you managing to those same goals in a holistic approach or are you stressing one aspect more than others?